Country Report - Brazil

Presentation of the country

Introduction

In terms of its essential features the overall macroeconomic policy framework adopted in Brazil has been basically the same since 1999. This framework, the so-called tripod of economic policy, consists of a policy of explicit inflation targets, a floating exchange rate regime(world's seventh largest economy at market exchange rates) and specific targets for the primary budget surplus. Yet, despite this element of continuity of the macroeconomic policy framework, the performance of the Brazilian economy in the first half of the decade was not impressive but did improve considerably from 2006 on.

The purpose of this paper is to show that the interaction between large changes in the external conditions facing the economy since 2003 and smaller changes in the orientation of domestic economic policy after 2005 explain the improved control of inflation, the recovery of more satisfactory rates of economic (GDP) growth and the stronger improvement in income distribution and poverty reduction in the second half of the decade. The change in the orientation of economic policy explains the relatively moderate contraction and quick and strong recovery of the economy after the peak of the world crisis hit Brazil in late 2008.

Brazil's expansion was initially led by a boom in exports and GDP growth was not very fast; but

from 2006 on, export growth lost steam and the internal market began to grow faster, thanks to a

more expansionary macroeconomic policy. This was especially important when the economy was hit by the world crisis in late 2008; it had three quarters of negative growth but recovered quickly in late 2009 so that annual GDP fell only 0.65 percent in 2009.

1.1. Presentation

Brazil, officially the Federative Republic of Brazil, the largest country in South America and the fifth largest in the world by geographical area(8,514,877 km2) and by population (203 million people). The population all over the country is distributed unequally.

The capital of Brazil is Brasilia and the official language is Portuguese while Spanish is spoken in the remaining countries of south America..Their main religion is Roman Catholic.

Brazil was a colony of Portugal, but gain it's independence in 1882 and a presidential republic in 1889.Its current Constitution 1988 defines Brazil as Federal Republic.

The form of the government is that of a democratic republic with a presidential system.The president is both head of the state and head of government of the Union and is elected for a four year-term.The current president is Dilma Rousseff. There are three political entities The States ,the Municipalities and the Federal District. Legislative houses in each political entity are the main source of law in Brazil. The legal system is based on the Federal Constitution, which was promulgated on 5 October 1988, and is the fundamental law of Brazil.

Brazil is composed of 26 States ,one federal district and municipalities. Their administrations are autonomous and have independent Courts of Law for common justice. The federal district has regions which are merely geographical, not political or administrative divisions. Municipalities, as the states, have autonomous administrations, collect their own taxes and receive a share of taxes collected by the Union and state government. Each has a mayor and an elected legislative body, but no separate Court of Law. Indeed, a Court of Law organized by the state can encompass many municipalities in a single justice administrative division called comarca (county).

1.2. Demographic trends

 The population of Brazil(203 million people) ranks as the sixth largest in the world and is estimated to be growing at approximately 1.3% per year.The density per km2 of the population is 23/km2.

2005 2006 2007 2008 2009 2010 2011

Million 186,112,8 188,078,2 190,010,6 196,342,6 198,739,3 201,103,3 203,429,8

 Number of population per square kilometer:

2005 2006 2007 2008 2009 2010 2011

21.86 22.1 22.32 23.07 23.34 23.62 23.89

 The average annual percent change in the population, resulting from a surplus (or deficit) of births over deaths and the balance of migrants entering and leaving a country. The rate may be positive or negative

2005 2006 2007 2008 2009 2010 2011

Natural growth rate 1.06 1.04 1.01 1.23 1.2 1.17 1.13

 Over 80% of the population in Brazil is urban and almost 30% is rural. The metropolitan areas have populations of around 12, 19 million. Some 14 other metropolitan areas have populations of more than 1 million. The population growth is spreading over all regions, but the North and Centrewest are expected to grow at faster rates.

%of total population 1999 2004 2009

Urban 80.5 83.5 86.1

Rural 19.5 16.5 13.9

 The distribution by the 3 main categories of age profile is that about 42 % of the population is under 20 years and less than 7% is over 65.The average life expectancy is 70 years.

Life expectancy at birth(years)

2005 2006 2007 2008 2009 2010 2011

71.69 71.97 72.24 71.71 71.99 72.26 72.53

%of total population 1998 2003 2008 Trend

0-14 years 29.3 26.6 24.5 ↓

15-64 years 65.5 67.6 68.9 ↑

over 65 years 5.2 5.8 6.6 ↑

 Human development index

Year Brazil High human development Latin America and the Caribbean World

2011 0.718 0.741 0.731 0.682

2010 0.715 0.739 0.728 0.679

2009 0.708 0.734 0.722 0.676

2008 0.705 0.733 0.720 0.674

2007 0.700